Intermountain Stroke Ctr., Inc. v. Intermountain Health Care, Inc.
| Decision Date | 31 March 2014 |
| Docket Number | Case No. 2:13-cv-00909-DN |
| Parties | THE INTERMOUNTAIN STROKE CENTER, INC., AND DR. NANCY FUTRELL, Plaintiffs, v. INTERMOUNTAIN HEALTH CARE, INC.; IHC HEALTH SERVICES, INC.; AND SELECTHEALTH, INC., Defendants. |
| Court | U.S. District Court — District of Utah |
ORDER GRANTING IN PART
DEFENDANTS' MOTION TO DISMISS
FOR FAILURE TO STATE A CLAIM
UPON WHICH RELIEF CAN BE
GRANTED AND REMANDING
REMAINING CLAIMS TO STATE
COURT
Plaintiffs claim that Defendants engaged in misrepresentations that violated the Lanham Act1 and Utah's Truth in Advertising Act,2 and committed the state law tort of intentional interference with Plaintiffs' actual or prospective economic relations.
The complaint was initially filed in Utah State Court. Defendants removed to federal court under 28 U.S.C. § 1441(a). Jurisdiction is proper under 15 U.S.C. § 1125, 28 U.S.C. § 1331, and 28 U.S.C. § 1367(a).
Defendants filed a motion to dismiss all claims under Rule 12(b)(6) of the Federal Rules of Civil Procedure.3 The motion is granted with respect to Plaintiffs' Lanham Act claim. The remaining state law claims are remanded to Utah State Court.Contents
INTRODUCTION ........................................................2
Standard on Motion to Dismiss..........................................................4
Discussion.................................................................5
Defendants—Intermountain Health Care Inc., IHC Health Services Inc., and SelectHealth Inc. (collectively, "IHC")—are Utah Corporations.4 SelectHealth Inc. is a Health Maintenance Organization that offers insurance plans within the State of Utah.5 IHC Health Services owns and operates hospitals and clinics in Utah and Idaho.6 Both entities are wholly owned subsidiaries of Intermountain Health Care Inc.7
Plaintiff Dr. Nancy Futrell ("Dr. Futrell") is a physician licensed to practice in Utah.8 She is board certified in neurology and vascular neurology and specializes in the treatment of strokesand transient ischemic attacks ("TIAs").9 Until March 24, 2013, Dr. Futrell practiced at the Intermountain Stroke Center Inc. ("Stroke Center").10
The Stroke Center closed on March 24, 2013.11 According to Plaintiffs, it was forced to do so largely as a result of IHC's conduct.12 Plaintiffs allege that the standard of care with respect to stroke and TIA treatment requires that the patient either be immediately hospitalized or be seen within forty-eight hours at a same-day, urgent-care stroke clinic.13 Plaintiffs allege that IHC frequently saw stroke and TIA patients in IHC emergency rooms, failed to hospitalize such patients, and refused to refer them to the Stroke Center—the only same-day, urgent-care stroke clinic in Utah.14 As a result, according to Plaintiffs, stroke and TIA patients treated by IHC often received sub-standard care.15 Because treatment at the Stroke Center was not covered by IHC insurance, many stroke and TIA patients were forced to settle for IHC's allegedly sub-standard treatment.16 Plaintiffs claim that if IHC had attempted to meet the standard of care by referring patients to the Stroke Center, or if IHC had covered treatment at the Stroke Center under IHC insurance plans, Plaintiffs would have had many more patients than they did.17
Plaintiffs allege that IHC misled patients and consumers regarding the nature of their stroke and TIA care. According to Plaintiffs, IHC's advertising represents that IHC provideshigh quality and low cost care while employing the best medical practices.18 Plaintiffs allege that IHC failed to meet the standard of care for stroke and TIA treatment and did so in a manner that increased treatment costs for IHC patients.19 Similarly, Plaintiffs allege that IHC's website and other materials distributed by IHC are designed to lead patients and consumers to believe that IHC employs a large number of physicians who specialize in the treatment of stroke and TIA,20 though IHC "is nearly devoid" of stroke specialists who are in a position to provide treatment in accord with the standard of care.21 Finally, Plaintiffs allege that IHC falsely represents that it attempts to avoid inappropriate sources of revenue and carefully reviews its financial relationships for compliance with federal laws that prohibit rewarding physicians for referrals.22 According to Plaintiffs, IHC recently entered into a settlement agreement with the United States Department of Justice for violations of those very laws.23
Plaintiffs claim that IHC's statements violated both the Lanham Act24 and Utah's Truth in Advertising Act ("UTIAA").25 Plaintiffs also claim that IHC intentionally interfered with Plaintiffs' actual and prospective economic relations.26
A party may move to dismiss a complaint under Rule 12(b)(6) where the plaintiff has failed to state a claim upon which relief can be granted. For purposes of a 12(b)(6) motion, theallegations of fact in a complaint are accepted as true and construed in the light most favorable to the non-moving party.27 However, the court is "not bound by conclusory allegations, unwarranted inferences, or legal conclusions."28 "[T]o withstand a motion to dismiss, a complaint must contain enough allegations of fact to state a claim for relief that is plausible on its face."29
Plaintiffs allege that IHC misrepresented the quality, character, and expense of IHC's treatment options for stroke and TIA patients, as well as the nature of its business practices generally. Those alleged misrepresentations form the basis of Plaintiffs' claims under the Lanham Act and UTIAA. They fall into four categories.
First, Plaintiffs allege that IHC made general claims in their marketing which are likely to mislead as to the quality of IHC's stroke and TIA treatment. IHC advertises that it "contribute[s] to . . . best medical practices, and raising the standard of clinical excellence";30 employs "best medical practices," or "what works best," to provide quality healthcare at reduced costs;31 provides the "best possible care";32 and provides "excellent care of the highest quality at an affordable cost."33 IHC's SelectHealth Medicare Advantage insurance plan is marketed to seniors—the population most at risk of stroke and TIA—and is advertised as providing access to"an exceptional level of care and value."34 Plaintiffs claim that these representations lead consumer to believe that IHC provides low cost care of high quality for the treatment of stroke and TIA.35 Instead, according to Plaintiffs, IHC provides sub-standard stroke and TIA treatment at increased cost.36
Second, Plaintiffs allege that IHC misleads consumers as to the number of physicians employed by IHC who specialize in the treatment of stroke and TIA and who are available to provide such treatment in accord with the standard of care. The IHC website lists stroke care under "Heart and Vascular Services."37 A "Find a Doctor" link on the portion of the site devoted to stroke care lists heart and vascular surgeons, but not vascular neurologists or stroke specialists, as treatment providers.38 The website does not disclose the fact that IHC is "nearly devoid of board certified neurologists and vascular neurologists specializing in the treatment of stroke and TIA patients" who are in a position to provide follow-up care within forty-eight hours of a stroke or TIA.39 An annual stroke report issued by IHC represents that its Neuroscience Institute is available to provide "resources for patients with ongoing needs after hospitalization" and access to "subspecialists including epileptologists, general neurologists, physical medicine and rehabilitation physicians, and neuropsychologists."40 Plaintiffs claim that these representations are "calculated to mislead or confuse [IHC] stroke and TIA patients into believing that a wide range of physicians are available to treat them for stroke and TIA . . . ."41
Third, Plaintiffs allege that IHC engaged in misrepresentations concerning their efforts to avoid inappropriate sources of revenue and their efforts to comply with federal laws that prohibit the practice of compensating physicians for referrals. IHC's Code of Ethics claims that IHC will avoid "compensation arrangements in excess of fair market value" and "actions that inappropriately create revenues . . . ."42 Instead, according to Plaintiffs, IHC refused to refer patients to the Stroke Center or to provide insurance coverage for treatment at the Stroke Center.43 IHC did so, Plaintiffs allege, to avoid diverting income from IHC,44 with the result that stroke and TIA patients received sub-standard care at increased costs.45
IHC's Code of Ethics also states that IHC will 46 Despite these representations, IHC entered into an agreement with the United States Department of Justice in April of 2013 to settle claims arising out of an improper compensation scheme in which physicians were rewarded for the value of...
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